As part of its ongoing process to reduce cross holding Tata Sons, the promoter of Tata Group of companies, will invest about ₹1,458 crore to hike its stake in Tata Global Beverages and Tata Chemicals by 6.84 per cent and 4.39 per cent, respectively.
The move is in line with Tata Sons Chairman N Chandrasekaran’s vision to unwind cross-holding in group companies for a simple shareholding structure.
Tata Sons will acquire 4.31 crore shares or 6.84 per cent in Tata Global Beverages from Tata Chemicals for about ₹777 crore, TGBL said in a regulatory filing.
The company said the acquisition price will not be more than 25 per cent of ₹179.99 (weighted average market price for the last 60 trading days) per share.
On the other hand, Tata Sons will acquire up to 1.11 crore shares or 4.39 per cent stake in Tata Chemicals from Tata Global Beverages for about ₹681.45 crore. The acquisition price will not be more than 25 per cent of ₹609.23 (weighted average market price for last 60 trading days) per share, said Tata Chemicals in a statement.
Both companies expect the proposed acquisition to be done on or after September 18 and the shares are proposed to be acquired at the prevailing price on the date of acquisition, it added.
Currently, Tata Sons holds 22.63 per cent and 19.35 per cent in Tata Global and Tata Chemicals, respectively.
The simplification of cross-holding will not only unlock value for investors, but also help companies reduce debt and improve their profitability.
However, with the sale of holdings, the Tata group companies will lose out on earnings from regular dividend payouts which acts as a sort of financial hedge in bad times.
In June, Tata Sons acquired 83.6 million shares of Tata Motors from Tata Steel for about ₹3,800 crore.
As of June quarter, Tata Steel holds just one lakh shares of Tata Motors against 2.93 per cent held in the March quarter.
The scrip of Tata Global were up 1.39 per cent at ₹212 and that of Tata Chemicals increased 2.58 per cent to ₹634 on Tuesday.